Fitch Affirms GCCFC 2007-GG11

CHICAGO--()--Fitch Ratings has affirmed 19 classes of Greenwich Capital Commercial Funding Corporation (GCCFC) commercial mortgage pass-through certificates series 2007-GG11. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The affirmations reflect continued paydown and overall stable performance since Fitch's last rating action. While defeased collateral has increased, Fitch remains concerned about a number of highly leveraged loans, which may have trouble refinancing. All of the loans in the pool mature in 2017. Fitch modeled losses of 5.7% of the remaining pool; expected losses on the original pool balance total 12.2%, including $238.6 million (8.9% of the original pool balance) in realized losses to date. Fitch has designated 17 loans (30.6%) as Fitch Loans of Concern, which includes one specially serviced asset (0.4%).

As of the September 2016 distribution date, the pool's aggregate principal balance has been reduced by 42.3% to $1.55 billion from $2.69 billion at issuance. Per the servicer reporting, 16 loans (20.3% of the pool) are defeased. Interest shortfalls are currently affecting classes E through S.

The largest contributor to expected losses is the One Liberty Plaza loan (21.1% of the pool), which is secured by a 53-story, Class A office building located in lower Manhattan. Built for U.S. Steel in 1972, the glass and steel tower contains approximately 2.3 million sf. Occupancy had fallen to 82% as of June 2016 from 99% at year-end (YE) 2013 due to the departure of two large tenants. While a few small portions of the space have been leased the majority of it remains vacant. Additionally, media reports indicate that Zurich American Insurance Co., which accounts for 11.7% of net rentable area (NRA), is negotiating office space at 4 World Trade Center. The Zurich lease runs through May 2017 and the servicer reports that the company is most likely vacating upon their expiration. The borrower, however, reports that they are encouraged by the strength of tour and proposal activity. The debt service coverage ratio (DSCR) was reported to be 0.98x at YE 2015. Brookfield Office Properties is the sponsor of the loan.

The next largest contributor to expected losses is the Eola Park Center loan (1.8%), which is secured by a 166,497 square foot (sf) 14-story office building located in Orlando, FL. Occupancy and rental rates have gradually declined since issuance due to a soft Orlando office market. The special servicer approved a loan modification in June 2015 splitting the loan into a $17.5 million A-note and a $10.2 million B-note. The loan has remained current since returning to the master servicer in December 2015. Fitch, however, assumed a 100% loss on the B-note portion. As of June 2016, occupancy has improved to 73% from 65% at YE 2015.

The third largest contributor to expected losses is the specially serviced Best Buy & Delphax Technologies loan (0.4%). The loan transferred to the special servicer in March 2016 and is secured by two adjacent industrial buildings totaling 160,177 sf located in Bloomington, MN. According to the June 2016 rent roll, current occupancy is 48%, but is projected to be 18% by YE 2016. One building was formerly 100% occupied by Best Buy until the tenant vacated upon their lease expiration in January 2016. Foreclosure is expected to occur in the first quarter 2017 and Fitch expects a high loss severity due to the recent occupancy issues.

RATING SENSITIVITIES

The Rating Outlooks on the senior classes remain Stable due to increasing credit enhancement from continued paydown and defeasance. An upgrade to class A-M is possible as loans pay off at maturity. The subordinate classes will continue to see downgrades if loans are unable to pay off at maturity and losses are realized.

USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G-10

No third party due diligence was provided or reviewed in relation to this rating action.

Fitch affirms the following classes as indicated:

--$784.6 million class A-4 at 'AAAsf'; Outlook Stable;

--$199.6 million class A-1-A at 'AAAsf'; Outlook Stable;

--$268.7 million class A-M at 'Asf'; Outlook Stable;

--$211.6 million class A-J at 'CCCsf'; RE 100%;

--$20.2 million class B at 'CCCsf'; RE 50%;

--$26.9 million class C at 'CCsf'; RE 0%;

--$20.2 million class D at 'Csf'; RE 0%;

--$20.1 million class E at 'Dsf'; RE 0%;

--$0 class F at 'Dsf'; RE 0%;

--$0 class G at 'Dsf'; RE 0%;

--$0 class H at 'Dsf'; RE 0%;

--$0 class J at 'Dsf'; RE 0%;

--$0 class K at 'Dsf'; RE 0%;

--$0 class L at 'Dsf'; RE 0%;

--$0 class M at 'Dsf'; RE 0%;

--$0 class N at 'Dsf'; RE 0%;

--$0 class O at 'Dsf'; RE 0%;

--$0 class P at 'Dsf'; RE 0%;

--$0 class Q at 'Dsf'; RE 0%.

The class A-1, A-2, A-3 and A-AB certificates have paid in full. Fitch does not rate the class S certificates. Fitch previously withdrew the ratings on the interest-only class XP and XC certificates.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Counterparty Criteria for Structured Finance and Covered Bonds (pub. 01 Sep 2016)

https://www.fitchratings.com/site/re/886006

Criteria for Rating Caps and Limitations in Global Structured Finance Transactions (pub. 16 Jun 2016)

https://www.fitchratings.com/site/re/882401

Global Structured Finance Rating Criteria (pub. 27 Jun 2016)

https://www.fitchratings.com/site/re/883130

U.S. and Canadian Fixed-Rate Multiborrower CMBS Surveillance and U.S. Re-REMIC Criteria (pub. 13 Nov 2015)

https://www.fitchratings.com/site/re/873395

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1013088

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1013088

Endorsement Policy

https://www.fitchratings.com/regulatory

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Contacts

Fitch Ratings
Primary Analyst
Daniel Anderson
Associate Director
+1-312-606-2305
Fitch Ratings, Inc.
70 West Madison
Chicago, IL 60602
or
Committee Chairperson
R. Brook Sutherland
Senior Director
+1-312-606-2346
or
Media Relations:
Sandro Scenga, +1-212-908-0278
sandro.scenga@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Daniel Anderson
Associate Director
+1-312-606-2305
Fitch Ratings, Inc.
70 West Madison
Chicago, IL 60602
or
Committee Chairperson
R. Brook Sutherland
Senior Director
+1-312-606-2346
or
Media Relations:
Sandro Scenga, +1-212-908-0278
sandro.scenga@fitchratings.com